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First Bancorp Message Board

  • the10kdetective the10kdetective Dec 31, 2010 10:52 AM Flag

    FED taking bigger stake is a negative you understand

    Do you really believe ALLY TARP pref conversion suggests strength for ALLY or FBP?Think carefully. FEDS want their rescue money back. If Banks were able to do so they have. That is considered a positive for the Bank. Forced situations where the FEDS and taxpayers have to take equity in failing banks above market prices is negative for the institution. Any other characterization is misguided. I do agree that if FBP survives dilution will be the issue that drives the price down hard. That is why institutions were/are not willing to pay more than .10 when inquiries were made to dozens in early december. That was why they had to dump loans carried as assets on their books at further huge discounts and why that was driven by inability to sell stock in secondary at even ultra low prices relative to market. Of course that was the price sophisticated institutions felt was fair given bank's predicament and extrapolating some similar writedowns for the balance of their bad paper. They then went to beg FED to take the stock instead of cash at a huge discount to what they had loaned FBP. Hope of getting institutions to fully subscribe with FED taking stock and then "only " having to sell billions of shares to raise 350 million. I do believe FEDS want FBP to survive to compete in PR. They may not care who ends up owning it. If a deadline exists out of the recent begging to get Fed to let them raise less money then the bank could close over a weekend and have many of the same people working there for Scotia or some other player on Monday. It is a risk given inability to raise funds thus far. Hard to believe individuals think some kind of miracle takeover for a failing institution warrants holding here, when you are at risk of seizure (maybe 20%) or will be able to buy at much lower prices after secondary. Of course delisting and reverse split will/could also be damaging. If any of you call the underwriters and get anybody they will at a minimum tell you that you will be able to buy stock at a significant discount to market ( I am sure even the misguided bulls will concede any massive secondary will come at a substantial discount to market). Whether you have the clout to extract the price talk of .10 or not you wont be able to find out til you try. Clearly it is way south of here. Good luck.

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